In Defense of Capitalism

Below is an email, presented chronologically, between myself and several colleagues. Names have been redacted. The final part of the email is my response in defense of capitalism. As always, your thoughts are welcome.



From: Lundell,Jason
Sent: Thursday, February 19, 2009 2:57 PM
Subject: My thoughts exactly!

From Drudge Report:

VIDEO: 'The government is promoting bad behavior... do we really want to subsidize the losers' mortgages... This is America! How many of you people want to pay for your neighbor's mortgage? President Obama are you listening? How about we all stop paying our mortgage! It's a moral hazard'... MORE...

See this link for the video from CNBC. Worth the 5 minutes to watch.

http://www.cnbc.com/id/15840232?video=1039849853



From: XXXXXX
Sent: Thursday, February 19, 2009 4:06 PM
Subject: RE: My thoughts exactly!

Here is something almost as stupid!

I realize that the mortgage relief will be used in many different ways, but the simple math makes no sense!

75,000,000,000 / 9,000,000 families = $8,333/family

I could hardly refinance my home for $8,333.

My opinion, Obama claims that he tried to save us from the melting housing market, it fails, and he blames Bush for it all. Obama can then claim that he tried. Bush is to blame for a lot of this mess, but I thought we elected the person who was going to save us from this mess.



From: XXXXXX
Sent: Thursday, February 19, 2009 10:45 PM
Subject: RE: My thoughts exactly!

Couldn't agree with you guys more. The stupid plan also wants to reduce montly mortgage payments to a more manageable recommended 31% of monthly income. Are you freaking kidding me! Ours is less than 16%. That is ridiculous. Everyone always has to max out!

Like Wilbur Ross says (http://en.wikipedia.org/wiki/Wilbur_Ross ) even if they reduce it to 2%, (heck I say no interest) the idiots still can't afford the payments. These idiots can barely even afford the tiny teaser rate or no interest that is about to reset.

I want a piece of the American fraud pie.

We have no debt but mortgage. I should open new lines of credit daily. Max it to the sky, write those convenient checks to offshore accounts, declare bankruptcy. [Redacted] sees it all the time at the credit union. People completely obilterate their credit and years later they have high scores again. She mentioned to me the other day it pisses her off. Why be responsible? I'm better off joining the fleecing of America. Might as well start with my Bof A and Citi credit card since they are about to be nationalized anyway. BAC and C going to 0.

Think of it as getting my social security benefits now before the coffers are completely empty!

Best Regards,
Stanford Madoff Capital
"We guarantee you 100% returns or your money back"



From: XXXXXX
Sent: Friday, February 20, 2009 10:48 AM
RE: My thoughts exactly!

I don't know who the rebel rouser was in the video, but he's an idiot!

This entire problem is due to the mathematical illiteracy in this country, in combination with the materialistic greed that can be found every where from Wall St to Main St. The combination of these two have lead us here, and the only way to prevent this from ever happening again is to properly educate the next generation! I'm not talking about educating them in the funny math that is played on wall st, but basic math and science that will lead to new discoveries; which has continuously proven to be the greatest economic drivers in modern history. The new ways of making money out of nothing, that seems to be the way of the bankers and financers on Wall St, is not economic growth or development, it is fraud! That is what caused us to arrive to this point!

Step away from your credit cards and credit lines, and get back to the basics of ingenuity and creativity driven by curiosity! That is what will get us out of this problem, not government spending, not bankers and not the automakers, those are the [redacted] that caused all of this!!

So quit your [redacted] and get to work!



From: Lundell,Jason
Sent: Friday, February 20, 2009 11:52 AM
RE: My thoughts exactly!

Interesting proposal and I agree with your general idea. Excess greedy capitalism got us into this mess and I think, ironically, it will be excess greedy capitalism that will get us back out.

The basic problem is this: the economy is in a recession because of decreased consumer confidence, lack of consumer spending, lack of sufficient money flow between willing market participants, and increased unemployment. All four fundamental concepts are interconnected. If one falters, the others will eventually collapse. Conversely, if one is bolstered, eventually the others will tend toward improvement. Excessive greed brought all of the fundamentals into complete disarray. If the common people and citizens can't be trusted with allowing the market forces to correct this problem, then who can best fix the alignment of these fundamentals? Government? What can government do best? Spend money--your money, by the way. Government spending doesn't significantly impact consumer spending or consumer confidence. By the very nature of spending anything, you can impact the money flow regardless. But the government forcefully takes away money from its constituents ("We the People"), and allocates or redistributes it in the form of spending. Clearly, government is not a market participant in the capitalist sense. Government may impact unemployment marginally so long as the unemployed are hired permanently by the government and the government maintains this new higher level of spending to keep the previously unemployed in a continuously employed state. As Ronald Reagan emphatically stated in his first inaugural address, "In this present crisis, government is not the solution to our problem; government is the problem."

Our economy is capitalist-influenced, but heavily regulated and restricted so as to not make it purely capitalist. The government seems to (inappropriately) take credit whenever the market forces of capitalism prove correct and wealth abounds. However, at an instant when this supposed version of capitalism begins to sway towards failure, the government quickly points the finger of blame and says, "We knew this would happen! This is why we need dramatic reforms and quickly!"

The dramatic reforms being proposed today in Congress and among so-call informed pundits on 24-hour news channels sound more like socialism than anything else. If you'll correctly recall there was a 60-year dramatic scientific experiment with socialism that proved disastrous (e.g., USSR). Even in the backyard of America you'll find Cuba (also a socialist country) still driving cars manufactured in the 1950s, the very era in which Castro came to power and ended capitalism. Interestingly, China recognizes it can't fight the forces of capitalism and has made significant reforms to adopt some of the powerful principles of capitalism. Capitalism is the real source for the wealth of all nations.

Fraud is not a byproduct of capitalism. Evidence of fraud is found in every economy type or political structure since the beginning of politically-organized economic entities. From totalitarian to fascist regimes, fraud is pervasive and difficult to counter. Fraud will happen regardless, even if America (forbid) becomes more socialist. Clearly some of the reforms touted today are intended to fight fraud, which is thought to have originated with capitalism. Socialism, it is thought, allows the government to run business and dictate the terms of market behavior. If the government dictates the terms, then there will be no fraud. How sad will be the day when America the beautiful finds fraud in a socialist-driven economy. Then will begin the slippery slope slouching towards communism, where even individual identity, personality and personal preferences are run by the state!

We need to fight back! Capitalism has been proven to work better than any other man-made market theory. Enough with the bleak and confounded dissensions about the doom and gloom of capitalism! America is stronger than the rest of the world thanks to capitalism. We need to bound together right now behind the very principles the founding fathers fought hard to provide and protect. The American people are better than this; they deserve better than this; they can work hard to achieve better than this!

Respectfully submitted,

Jason